Deal paves way for second phase of Brexit negotiations, covering trade talks and transition period.

Britain and the European Union have reached a preliminary agreement on the terms of a "Brexit" divorce, allowing them to open up talks on the future of their relationship.

The European Commission announced on Friday that "sufficient progress" had been made by Britain on separation issues including the Irish border, Britain's divorce bill, and citizens' rights.

Theresa May, British prime minister, arrived in Brussels early on Friday to reach the deal.

She said there would be no hard border between Northern Ireland and the Republic of Ireland and that EU citizens in the UK "will be able to go on living as before".

EU leaders are now set to meet in Brussels on December 14, where the agreement will open the second phase of Brexit negotiations, covering trade talks and a transition period.

"I am hopeful, sure, confident, sure, that they will share our appraisal and allow us to move on the next phase of the negotiations," European Commission President Jean-Claude Juncker said on Friday.

Juncker said, however, that he did not want Britain to leave the EU "but now we must start looking for the future".

Britain leaves the EU on March 29, 2019, but negotiations must be wrapped up within a year to leave time for parliaments to endorse any deal.

Current rules allow people and goods to pass freely between the Republic of Ireland and Northern Ireland with no border checks.

Ireland wants to preserve the existing rules but May is struggling to balance those demands against the concerns of Northern Ireland's Democratic Unionist Party.

"The big issue here is really how people will be able to travel from north and south, many people travel from North to South each day and from the perspective of the Irish government was that border would be visible and that is what the British government wanted, but there was no firm commitment," said Donnacha O Beachain, associate professor at the School of Law and Government, Dublin City University.

"This is something that the British government has agreed to the past few hours in this deal that in all circumstances there will be no visible border between the UK and Ireland which is of the primary importance."

Sterling reacted positively to the news of a deal, rising against the dollar and euro.

Meanwhile, British business groups expressed relief that Brexit talks finally looked set to address future trade and economic relations.

Issuing his draft guidelines for the talks ahead, EU President Donald Tusk said Britain will have to follow all EU laws during the two-year transition period.

'A series of climbdowns'

Britain voted in June 2016 to become the first state to leave the EU, after more than four decades of membership, but the talks have been slow moving.

Peter Geoghegan, a writer and lecturer based in Glasgow, said: "It really a series of climb-downs from the UK.

"With the divorce bill, a few months ago they said they wouldn't pay anything. Now we're looking at a figure of between 40bn and 60bn euros."